 PUBLIC WORKS |
 Huge Work Sites in Perspective |
Public works and transport are hugely important sectors for the development of investment, whether national or foreign. The Algerian Government has understood this point and has approved an ambitious program of economic stimulation which should enable important investment efforts between 2001 and 2004. It is true that Algeria is greatly lagging behind in this field. With regards to public works, only the most important regions have highways, whereas small and medium cities have only narrow streets lacking any sort of maintenance. The development of the east-west highway linking Tunisia to Morocco, a project which was announced at the end of the 1980's with the creation of the Union of the Arab Maghreb, remains stalled to this day. The construction of other infrastructures, such as dams, is another priority for the government. Access to water is still one of the main preoccupations of the population who had to endure 2 decades of chronic drought. Furthermore, a number of expansion projects need to be developed to ensure the growth of Algeria's seven commercial ports and 20 or so airports. It is therefore time to undertake major works to make up for lost time and enter an era of economic growth and prosperity. According to Mr. Medelci, former Minister of Finance "during the past 10 years, Algeria was more interested in cost cutting than in improving basic infrastructures. Today however, with the economic stimulation program, we are making up for lost time."
| East-West and Trans-Sahara Highway Project |
The mission of the Ministry of Public Works is to set all the right conditions for the realization of a number of strategic projects for the development of the economy and the improvement of living conditions in Algeria. Mr. Abdelmalek Sellal, former Public Works Minister, and current Minister of Transport insists on the great highway projects, the Trans-Sahara highway and the highway linking the countries of the Maghreb from east to west. For the latter, work started in 1987 for a planned total distance of 1216 Km, linking El Tarf, on the Tunisian border, to Maghnia on the Moroccan border, yet only 100 Km have been completed to this day. The Algerian Government is presently planning to call on the assistance of major foreign groups, which would obtain rights of operation in exchange for their participation, a clear sign that the procedures in terms of private investment in public infrastructures is becoming more flexible. The Algerian government cannot finance such infrastructures as it is simultaneously committed on different other projects. This highway project is considered in Algeria as the project of the century with an estimated cost of about 6 billion dollars for the construction of the remaining sections. Mr. Sellal, who urges public works companies to show interest, states: "we cannot face this challenge by ourselves, we need external help. The requirements for companies to be able to realize part of the projects to be implemented are diverse. It can be a direct realization, a partnership or even a BOT (Build, Operate, Transfer) in terms of realization and management." A number of multinational companies would be interested by the latter option which consists in the building and operation of sections, before the retrocession of the road infrastructure to the Algerian government. With regards to this, Mr. Sellal pointed out that the Ministry of Transport would soon begin talks with an American firm. For the moment however, the extreme cost of such project remains a great hindrance to the rapid progress of work. Prospects, on the other hand, are very enticing. According to Mr. Sellal: "the Algerian highway is much more cost-effective, with an average traffic of about 20,000 vehicles/day, while neighboring countries, in the best case can only account for 4000 vehicles/day."
| Partnership Invitation |
| Mr. Mohamed Hocine Ahriz, CEO of Sapta, an important company in the construction and public works sector, believes that the opening of the Algerian market has witnessed a considerable growth of the competition. In this framework, "foreign companies can bid if they wish to do so, for contracts in Dinars by virtue of free exchange." The CEO of Sapta also points out that "before, these companies were not interested in signing a contract if the projects were not financed by an international organization." There is greater competition for the greatest good of the market, namely from Asian companies, which are increasingly more present in the construction and public works sector in Algeria.
Investment is also oriented towards capital interest in public works companies. "When a foreign investor is interested in a public company, we are ready to talk about opening its capital. Taking position in the structure of the company can lead to representation within the privatized company in question" According to Mr. Sellal, these capital openings can go up to 40%. Cosider, a public company and national leader of the sector, is presently involved in partnerships with a number of companies and would like to open its capital. Mr. Abdelwahid Bouabdallah, CEO of Cosider points out: "Cosider believes that combining efforts and associating public and private interests is necessary (…). Our objective is to create durable relations with partners who have long-term prospects. The size of the Algerian domestic market and its solvency open great prospects for cooperation to complement our expertise and our resources". Sonatro is also a company involved in the construction and public works sectors. Present throughout Algeria, Sonatro evolved in the 1970's to give rise, in 1983, to 5 other road-building companies and a company specialized in art work. Having become independent in 1991, and despite a difficult economic environment, Sonatro continues to realize great projects, making it an essential partner which cannot be ignored in the public works sector. Mr. Rebbouh, CEO of Sonatro (National Company of Great Road Works) confirms the importance of partnership for his company: "We would like to become stronger, that is the reason why we are looking for a partner and those who are interested must possess the material and financial means (…) We can provide field experience, a scope of work and most importantly, administration knowledge."
| Khalifa Going for the Building and Public Works Sector |
Khalifa Group is a good example of the private sector's interest in the huge market that the building and public works sector in Algeria represents. Khalifa Group has recently taken control of Philipp Holzmann Company, the former number 3 building and public works company in Germany. The first Algerian private group has thus acquired the know-how that was lacking in the field of building and public works, taking advantage of a large European company's failure. With the resources of Holzmann International, Khalifa has now the expertise to undertake large-scale projects such as the construction of the airport of Bouzghoul or even the massive project for the construction of a new city called 'Algéria' in the middle of the desert to relieve Algiers.
Great prospects are thus opening up in the public works sector which will be greatly solicited in the coming years to update Algeria's infrastructures. Roads, dams, airports, all kinds of infrastructures: the markets at hand are huge. Algerian public works companies will not be able to cover the needs of this immense market on their own. A call for partnership and private investment is therefore, more than ever, issued.
Parallel to these statements, the building and public works sector which constitute a great consumer of labor force, may be the solution to lower the high unemployment rate presently recorded. It is therefore no understatement to say that the government pays great attention to this important sector which is essential to the future development of Algeria. |
